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HomeMy WebLinkAbout1980-08-05; Housing & Redevelopment Commission; N/A; Response to HUD Field ReviewDept.Hd. C. Mgr. C.Atty. VF;A MIETING OF:: GOCKET NO: August 5, 1980 - TITLE: -__ Response to HUD Field Review " INI'rIATED By: - Housing and Redevelopment Department WACKG:WND: The United States Department of Housing and Urban Development's Los Angeles Area Office of 1980. During the review period representatives of the Los Angeles Area Office visited conducted a field review of the Section 8 Rental Assistance Program during April and May the Commission's Administrative Offices at 3096 Harding Street and reviewed all aspects of the program's operation in light of the applicable HUD regulations. The review team found 26 specific areas of discrepancy ranging from basic program deficiencies to rather technical minor infractions. Staff was working to remedy several of these deficiencies prior to their identification by HUD. In fact, several problem areas were resolved prior to the review thereby eliminating several potential additional findings. The attached response to the HUD review has been prepared in an attempt to correct the appear distined to remain open pendin clarification or addditonal effort on the part of problems noted by HUD in its review. Of the twenty-six (26) findings only four (4) program staff. (#l, #7, #11, and #25 3 ATTACHED: a Resolution Ordinance tl] Agreements lJ Plat / Other: Response to HUD Field Review of April-May 1980. FINANCIAL STATEIWT " COMMISSION-BOARD RECOMMENDATION: KT€TimiF1Gj"&u~, 1980, the Housing and Redevelopment Advisory Committee accepted the attached response and recommended that the Comnission authorize it to be forwarded to the Pepartmgnt of Housing and Urban Development. RECOMMENDATION Accept staff report and authorize transmittal of response as attached. - - Dept. Housing and Redevelc .t 3096 Harding Street f CARLSBAD, CALIFORNIA 92008 July 16, ,1980 Mr. Donne1 R. Curry Chief, Assisted Housing Management Dept. Housing and Urban Development 2500 Wilshire Boulevard Los Angeles, CA. 90057 17141 TELEPHONE: 438-5611 Dear Mr. Curry: This correspondence is in response to the findings noted in your office’s field review of the Carlsbad Section S Rental Assistance Program. You will note that month. In those instances where final act.ion has not been taken, a notation of the response is in a format similar to ycur review findings as transmitted last same is made. It is understood that these findings will remain open until evidence of closure is received by your office. PART 1- SECTI3N 8 MANP\GEXENT REVIEW. Finding No. 1 The Administrative Plan needs to be revised. Corrective Action Status A draft revision of the Administrative Plan has been prepared. The HUD guidelines and regulations do not provide specific direction relative to this documents to discuss their individual approach to this issue to an attempt to development content. San Diego Area Housi.ng program managers will meet on July 16, 1980, a common framework for submittal to HUD. It is anticipated that closure of this finding will occur in September, 1980. . . Finding No. 2 The PHA has minimal participation in locations other than low income and miniority areas. Correcti ve Action Past practice of encouraoing to locate in farilities previously pledged to the Section 23 program has been discontinued. Eligible participants are encouraged to seek units of their own choice within the Commission's jurisdiction and ' established Fair Market Rents. This practice, in and of itself, will result in concentration in areas as noted in the findings. Increased efforts have been made to contact realty people and advertisements in local newspapers wi i: be undertaien i;s p.-ogram turnover increases. - Finding No. 3 The PHA has no training program for the staff relative to HUD Section 8 Occupancy and Eligibility requirements including the preparation of HUD Financial and other required reporting documents. Corrective Action The recently approved Htusing budget contains funding to increase the program's staff proficiency in the above noted areas. . Finding No. 4 The PHA has no bulletin board posted to provide HUO programmatic information for the general public. Corrective Active A bulletin board has been placed in the reception area and applicable Section 8 information posted for public view. PART l?. SECTION 8 FINANCIAL MANAGEMENT Findinq No. 5 - Requisitions for Payment of Annual Conhri.butions Although the Requisitions (Form HUO-52663) are submitted on a timely basis, the Form HUD - 52663 that was submitted for the quarter ending June 30, 1980, was incorrectly prepared. The amount of funds required for Housing Assistance previously requisitioned in Line 10, Column 5 was incorrect as submitted. Payments in line 07, Column 3 was not the correct amount, Administrative Fee Further, the Authority has not sublnitted quarterly data regarding cash on hand, invested, and monthly cash need as required by our February 22, 1978, letter to all PHA's. -2- Corrective Action Staf.: has Seen instructed to review HUD instructions for completing form HUD # 52663. The following information will be furnished with each requisition for funds. Cash on Hand Amount of Funds Invested Total Monthly Cash need This information will be submitted with the next quarterly Requisition. Finding No. 6- Year End Settlement Documents The Voucher for Payment of Annual Contirbutions, Form HUD-52681 for fiscal year ending June 30, 1979, requires revision due to following errors: 1. Number of Dwelling Units Under ACC should be 240. 2. Number of unit months should be 1246 instead of 948. 3. The approved estimate of required annual contributions (column 1) do not agree with the line items stated on the approved budget as shown below: Line 9- Preliminary Expense after ACC was approved for $27,161, and not reported. Line 11- Nonexpendable Equipment was approved for $1,339, and not reported. ' .Line 15- Total Fund Required was approved for $340,449, instead CIF $301,949, which was indicated. Line 21 - Total Partial Payment Received was approved the $264,413, instead of $198,437, which was indicated. . There was an overpayment due to HUD of $51,384. Corrective Action A revised HUD form 52681 is being prepared and submitted to HUD. Some of the numbers differ from those in HUD finding due to results of a review of the detail prior to the preparation of the revised reports. These differences were discussed with R. Goodman via telephone on or about June 16, 1980. - Finding No. 7 - Investment of Funds Data was not available to indicate the current investment of funds. Computer records indicated the following: November 1979 ($1,024) December 1979 $23,523 January 1980 ($21,820) -3- .- A February 1980 March 1980 _A .- The excess funds are comingled with those of the City of Carlsbad. Corrective ktion On February 9, 1979, Mr. Elliott and Ms. Villalobos, representing the Carlsbad Housing Authority corresponded with Mr. Ismael Melendez relative to the keeping of separate bank accounts for the City and Authority and requesting authority to merge the two accounts and accounting systems into one. On March 26, 1979, Mr. Melendez responded stating that. he had no objection to the proposal given compliance with HUD regulations. (Exhibit 11) Our current system accounts for funds separately as well as the interest earned on said funds. This finding will remain open pending clarification of this issue. Finding No. 8-Interest Controls 1. In checking the Bank Statement, it was observed that the Authority's funds are comingled with the City of Carlsbad fund. It was not possible to determine reason for check issuances. 2. There was no system established to insure the accuracy of Payment Vouchers at the time of this review, although the Authority indicated that controls were established as of March 1, 1980. 3. Payments were not being made to owners ina timely manner. Vouchers ;lave not been issued to the Accounting Department on a regularly scheduled basis. The frequent adjustments in HAP payments have made it difficult for the Accounting Department. This problem should be improved with the establishment of the 15th of the month as a cut off date. Corrective Action 1.Correspondence referenced in Finding No. 7 (Melendez) grants merging of bank accounts as well as accounting systems. 2 Payment vouchers are now cross referenced by tenant name and address thereby ensuring that all expenditures. can be tracked to valid certificates and Housing Assistance Payments Contracts. Finding No. " 9- Managing Agent The Authority is acting as a Managing Agent by collecting rent from tenants without a Management Agreement approved by HUD to provide this service. Corrective Abtion The staff has been in the process of divesting itself of the management function Carlsbad Housing and Redevelopment Commission and its staff are not involved in for approximately 6 months. This process was completed on July 8, 1980. The -4 colkxting rents or performing any other management function not authorized by proper regulations. Finding No. 10- Budget Documents The Estimate of Total Required Annual Contribution, Form HUD - 52673 for fiscal year 1978, 1979, and 1980, were incorrectly prepared. The Project Account in Line 4 for 1979 and 1980 needs to be revised as well as the Excess Project Account in Line 15. Line 17 is to indicate the Total Annual Contributions Approved for Requested Fiscal Year. This is the total shown in Line 14, and Line 16 (if any). Incorrect amounts result in inaccuracies in your Project Account Balance that is maintained by our Regional Accounting Division. " Corrective Action A revised 52673 for FY Ending June 3U, 1978, was mailed to HUD on June 20,.1980. A revised 52673 for FY Ending is being prepared and w.il1 be submitted shortly. Finding No. 11- HAP Register A review of a representative sample of HAP register records reveals the following: &I79 1. No documentation some files to justify rent increase and/or amount of increase in HAP payment. 2. A number of documents were incomplete such as: ACC Part I1 incomplete Contract or ACC number not recorded. Document not signed and/or dated. 3. Rewest to PHA for repairs, which is not authorized under Section 23 The addresses of files reviewed are: program. 3130 Jefferson - Apartment D 3138 Jefferson 687 "C" Magnolia 954 Home - Apartment "G" 3095 Harding "G" 2601 Avenida de Anita- Apartment 63 2541 Jefferson - Apartment 15 3474 Roosevelt - Apartment 10 3380 Harding - Apartment 8A 3183 Jefferson 3333 Roosevelt - Apartment 3 965 Laguna - Apartment 5 Corrective Action A71 HAP files are being reviewed and all posting updated in accordance with the clearance action noted in the field review. (Exhibit 111) -5- c A HAP register is now being maintained in the office at 3096 Harding Street, Carlsbad, California. PART I11 - SECTION 8 OCCUPANCY Finding No. - 12 The Housing Authority is performing management functions on behalf of owners participating in the Section 8 Program without prior approcal from HUD, thereby, approving contract rents above the Fair Market Rents and charging the owner a percentage of the contract rent. - Corrective Action The Carlsbad Housing and Redevelopment Commission is not currently performing management functions on behalf of owners. Contract rents above the fair market rents are not being approved. Finding No. ". 13 A number of appliations, HUD Form-52659, were incomplete, such as: 1. Date of appliation 2. Source of rate of pay 3. Signature of PHA's representative 4. Assests and allowacLes 5. Full names of family members, their ages, relationship, etc. Corrective Action This finding is being cleared in conjunction with the clearance action being undertaken on Finding No. 11 Finding No. 14 According to the admission date and the inspection date, a number of units were inspected after the contract was executed. Corrective Action All units will be inspected for housing quality standard compliance prior to lease approval. A directive to this effect has been issued. (Exhibit IV) Finding No. 15 A number of family files examined revealed the following discrepancies on income verifications, deductions and computing annual income; 1. Current verification of income and inadequate verification of medical expense. 2. No certification of full-time student over age 18 where a deduction was granted. -6 3. Copies of government checks used to verify source of income. 4. Computation of annual income was made by multiplying the hourly rate times hours worked per week times four weeks times twelve months (Example: $5.16 x 40 x 4 x 12 = $9,907.00). Corrective Action Projections of anticipated income shall be based on current income. Verification other than W-2 forms is required. All income computation is being done in accordance with Handbook 7420.7 as required by the program. Student status verification is currently done by authoritative representatives of the institution where the student is enrolled. Copies of U. S. Government checks are not accepted for verification purposes. (Exhibit V) Finding No. 16 An examination of a number of family files revealed that a new Form 52674 was not prepared upon change of contract rent. Corrective Action Shopping Incentive Credit computation will thke place when there is a change in contract rent, fainily income or other portion which could effect the rent reduction credit. (Exhibit VI) Finding No. 17 Due to the unavailability of forms for a Certificate Holder's Packet, the Specialist was unable to determine whether the required information is included in the packet. Corrective Action Steps have been taken to ensure that Certificate holders packet compy with 24CFR Part 882.209 (b). Several required forms must be obtained from HUD. Upon receipt 3 a minimum of 5 complete packets will be maintained. Finding No. 18 One tenant file examined revealed an $11.00 payment for rental furniture. Corrective Action A memo clarifying the HUD stance relative to payment for rental furniture has been - -7- distributed to ensure that this situation will not recur. (Exhibit VII) Finding No. 19 The security deposit of $259.00 was in excess of one months gross family contribution on one file examined. Corrective Action A directive relative to the owner's collection of security deposits has been promulgated to ensure that owners are properly advised relative to this issue. Finding No. 20 Family receiving assistance under Section 23 program qualified for a smaller unit when converted to the Section 8 Program. Corrective Am Upon expiration of the lease, (annual review) all tenants shall be reviewed to determine their status relative to appropriate unit size. ( Exhibit IX ! .Finding No. 21 The Request for Lease Approval was inadequately completed in a number of files, and a schedule of utility allowances was not available. - Corrective "" Action A directive has been distributed requiring that the status of utility payment be clearly evident on form 52667 and that same be clearly noted on form 52517A (request for lease approval). (Exhibit X ) Finding No. 22 A number of adjustments in contract rents exceeded the percentage of change in the most previous and current Fair Market Rents. Corrective Action Rent reasonableness certification is currently being used when increases exceed maximum allowable under requirements for rent adjustments. This practice will be fairly common due to the past practice of restricting rents to levels unrepresentative of the market. Finding No. 23 The gross rent exceeded the Fair Market Rent plus the 10 percent override on initial contracts. Corrective Action The directive attached as Exhibit XILhas been difitributed. -a- Finding No. 24 The Housing Authority granted increases in rents based on the maximum allowable amount wherein the owners made a request for less. Corrective Action The directive attached as Exhibit XII.has been distributed. Finding No. - 25 The PHA needs to make appropriate adjustments to correct tenant files. Corrective Action A directive has been prepared on this matter and adjustments are currently underway. This finding should remain open until certification of compliance is forwarded to HUD. PART IV SECTION 8 ENGINEERING HOUSING QUALITYNDARDS The Section 8 dwelling units listed below were inspected by Amy Villalobos of the Housing Authority and Leonard Ribnick of HUD, Los Angeles Area Office. All units were found to be in good condition except as noted: " 3333 Roosevelt Street, #5 Exhaust fan in bath inoperable. 2541 Jefferson Street, #6 2541 Jefferson Street, #15 2541 Jefl'erson Stree.t, #I 3380 Iiarding Street, #5 3380 Harding Street, #3 3434 Monroe Street , #2 2770 Madison Street, #12 The Housing Authority is providing good housing in a difficult market. _L Corrective Action See certification by MS. Villalobos regarding repair of fan in 3333 Roosevelt, #5. V/r Yaur response to our corrective actions is requested as early as possible so that any unresolved issues can be cleared in a timely manner. Sincerely, JACK E. HENTHORN HOUSING AND REDEVELOPMENT DIRECTOR MEMORANDUM DATE : July 9, 1980 TO : FROM: Amy Villalobos; Administrative Assistant, I-lousing Jack E. Henthorn; Director, Housing and Redevelopment SUBJ : VERIFICATION OF INCOME, DEDUCTIONS STUDENT STATUS, MEDICAL EXPENSE CLAIMS AND COiViPUTATION OF AIWJAL INCOI4E: . . Current income must be obtained to project anticipated income to cover the next twlve months. The use of W-2 forms is discouraged for inconle verific;tion, and it should be used only where the applicant has had the same position with an employer for at least two years. Medical expenses claimed by the family and anticipated for the next twelve months must be verified by the person (s) who receive payment for these expenses. Verification of full time student must be provided under the signature of an authoritative representative of the institution where the student is attending. The full amount of the checks does not reveal the gross amowt of the Copying of checks issued by the United States Government is prohibited. income. Cornputaiion of income must comply with Handbook 7420.7, Chapter 4-6. The hourly rate times the number of hours worked each week times 52 weeks Cents must be rounded to the nearest dollar. equals the anticipated annual income. (Example: $5.16 x 40 x 52 = $10,733). JEH: a1 MEMORANDUM DATE : July 9,1980 TO : FROM: Anly Villalobos, Admin. Assistant; Housing Jack E. Henthorn; Director, nousing and Redevelopment p@f?f SUBJ: RECOP4PUTATION OF SHOPPING INCENTIVE CREDIT: * . Whenever there is a change in contract rent, family income, etc., a form 52674 must be completed since these ch.anges may result in a change in the rent reduction credit, This recomputation must take place at least annually upon expiration of the participant's lease. JEH:al MEMORANDUM DATE: July 9, 1980 TO : FROM: Jack E. Henthorn; Director, Housing and Redevelopment98 Amy Villalobos, Admin. Assistant, Housing SUBJ: EXTRA PAYMENTS OUTSIDE OF LEASE: ” . HUD reviewers indi,cate that all extra payments made outside of an approved lease must be approved by the PHA. Therefore, any future rental agreements outside of the lease, (such as garages, storage, furniture) must be specifically approved through this office. All tenants aid owners should be so advised during briefing sessions or at lease renewal time. JEH:al MEMORANDUM DATE: July 9, 1980 TO : FROM: Jack E. Henthorn; Director, Housing and Redevelopment Amy Villalobos, Admin. Assistant, Housing SUBJ: ' FAMILY COMPOSITION CHARGE PRIOR TO RE-€XAI\1INATION: . Upon expiration of a lease a participating family is to be issued a certification based upon family composition at the time of certification. If a change in composition dictates a smaller unit than that previous!y occupied; then an appropriate chznge is in order on the certificate. A.family may occupy a larger unit provided that the gross rent does not exceed the fair market rent of the bedroom size indicated on the certificate. JEH:al j.! L MEMORANDUM DATE : July 9, 1980 TO : Amy Villalobos, Admin. Assistant; Housing FROM : Jack E. Henthorn; Director, liousing and .SUBJ : TENANT/OWNER PAYMENT OF UTILITIES: . * The utilities furnished by the owner and the utilities furnished by the fam-ily must be indicated as required on the Ilequest for Lease Approval. All items must be completed on the Form 5251714, and it must be properly executed by the owner and the family. Form 52667, Tenant-furnished Utilities and other Services should be included in the tenant file. JEH: a1 MEMORANDUM DATE : July 9, DE0 TO : FROM: Amy Villalobos, Admin. Assistant; Housing Jack E. Hcnthorn, Director; Housing and Redevelopmenw SUBS : FAIR MARKET RENT OVERRIDES: It is encumbent upon the Housing Authority to enforce program requirements. On a unit-by-unit basis, 20 percent of the units under the Annual Contributions Contract may exceed the Fair Market Rents by 10 percent, Any rents authorized the IO'percent override in the Fair Market Rents is used, it is to be in excess of this requirement without HUO approval is prohibited. Where indicated on Line 8, Form 52679. JEH:al M E N 0 R A’N D U M DATE: July 9, 1980 TO : Amy Villalobos; Admin. Assitant, Housing SUEJ: INTERPRETATION OF OWNER REQUEST FOR RENT IKREASE: FROM: Jack E. Henthorn; Director, Housing and Redevelopment)&# . HUD regulations provide the maximum allowable amounts for increases in contract rents.’ If an owner rnakcs a request for an increase in the contract rents and the request is less than the maximum allowable amount, the Housing Authority must not arbitra.rjly grant an increase for more than what the owner is requesting. Each family file must be properly documented with the owner‘s request for a rent increase. JEH:al ’. . MEMORANDUM DATE : July 9, I980 TO : FROM : Amy Villalobos, Adnin. Assistant, Housing . Jack E. Henthorn; Director, Housing and Redevelopment SUBJ: CORRECTION OF FILES AS NOTED IN HUD FINDING: Take immediate action to correct the files as noted in field review Finding No. 25, a copy of which is attached. This is to be completed not later than July 21, 1980.